It’s a little unusual for a transit agency to invest in real estate development but that’s just what the Los Angeles transit agency is doing by earmarking $9 million for a loan program to spur affordable housing near its stations.
The L.A. County Metropolitan Transportation Authority has a pretty good reason to help build housing near its bus and transit lines: doing so could encourage more ridership.
The funding would also help counter the effects of gentrification and displacement that research shows frequently accompany large public transit projects.
The agency already requires developers building on Metro property to set aside 35 percent of new units for low-income households, but the agency doesn't control that much land.
So Metro has launched a public-private partnership to loan money to developers at low interest to build more affordable housing within a half mile of transit lines.
The program, called the Metro Affordable Transit Connected Housing Program, or MATCH, relies on $9 million in seed funding from Metro and an additional $9 million from the California Community Foundation, the California Endowment and the Weingart Foundation.
"It’s really an anti-displacement strategy," said Jenna Hornstock, executive officer for Metro’s Transit-Oriented Communities programs. She said the loans will help preserve existing affordable housing in areas that are gentrifying and go toward helping to build around 1,800 new units.
A quarter of the loan funds will be allocated to help with new construction of affordable housing units. Three-quarters will be used to preserve and increase density in existing affordable housing near transit by offering nonprofits funding to purchase buildings that already offer housing below market rate.
Those organizations would need to agree to stabilize rents at an affordable rate and add more units to the building over time. The units would be affordable to households making 60 percent or less of the area's median income. In Los Angeles County, that would average about $38,580.
Ethan Elkind, a transit expert with the University of California, Los Angeles, and author of the book, "Rail Town," said Metro's investment is a promising and innovative approach to building much-needed affordable housing and sustaining transit ridership.
"It's a loan not a subsidy, so it's leveraging existing dollars, and affordable housing near transit is one of the best ways to ensure that nearby development actually generates ridership," he said.
But Elkind believes more reforms are needed at the city and state level, including changes to parking requirements, duplicative environmental reviews and zoning restrictions that increase housing costs and create barriers to building affordable units.
"A lot of that money could be saved if it was cheaper and easier to build affordable housing near transit," he said, referring to Metro's investment.
Metro's Hornstock said she thinks it's possible the agency could increase the scale of the investment if the program proves successful.
Because much of Metro's funding comes from voter-approved tax increases that are earmarked for specific projects, the $9 million seed funding came out of Metro's general fund, comprised of revenues from transit fares and real estate leases.
But Hornstock hopes it may be possible to apply funds from Measure M, the half-cent sales tax increase approved in November that will raise $120 billion over the next 40 years.
Measure M allocates 17 percent of revenues to individual jurisdictions in L.A. County to undertake local projects, including transit-oriented, community-building programs.